Steadfast Group Limited › FormBuilder › ... · 1 For statutory reconciliation refer to slides...

Steadfast Group Limited

Presenters:Robert Kelly- Managing Director & CEO

Stephen Humphrys- Chief Financial Officer

24 August 2018

FY18 results Investor presentation

FY18 investor presentationContents

▪ Our track record – five years listed on the ASX 3

▪ Financial and operational highlights 4

▪ FY18 financial performance 7

▪ FY19 guidance 12

Brokers on INSIGHTSteadfast Network brokers

200

250

300

350

400

FY13 FY14 FY15 FY16 FY17 FY18

Steadfast GroupOur track record - five years listed on the ASX

© 2018 Steadfast Group Limited │ 3

Underlying NPAT ($m)

Steadfast Client Trading Platform GWP ($m)

Steadfast Network GWP ($bn)

0

1

2

3

4

5

6


0

20

40

60

80

FY16 FY17 FY18

0

2

4

6

8

10


Underlying EPS (NPAT) (cents per share)

Steadfast Underwriting Agencies GWP ($m)

0

200

400

600

800

1,000

FY14 FY15 FY16 FY17 FY18

0

2

4

6

8


Underlying EBITA ($m)

DPS (cents per share)

0

40

80

120

160

200

240

FY16 FY17 FY18

1H 2H

0

20

40

60

80


0

40

80

120

160


1 For statutory reconciliation refer to slides 44 and 45 of the FY18 analyst pack.2 Calculated on a consistent basis since IPO.

FY18 underlying earnings1

▪ EBITA +15.5% to $165.6 million

▪ NPAT +12.9% to $75.0 million

▪ NPATA2 +11.6% to $97.3 million

▪ EPS (NPAT) +9.5% to 9.71 cents per share

▪ Final dividend +6.8% to 4.7 cents per share

▪ Total dividend +7.1% to 7.5 cents per share

▪ EBITA margins (aggregated):

▪ Equity brokers: 30.5% (FY17: 30.3%)

▪ Underwriting agencies: 44.9% (FY17: 42.5%)

FY18 statutory earnings

▪ Statutory NPAT +13.6% to $75.9 million

$27.8m $29.9m $34.9m

$60.4m$66.7m

$72.8m$29.6m

$32.4m

$55.6m

$69.2m

$76.6m

$92.8m

0

20

40

60

80

100

120

140

160

180


Underlying EBITA ($m)

$57.4m$62.3m

$90.4m

$129.6m

$143.3m

Financial highlightsStrong FY18 performance in-line with upgraded guidance


$165.6m

Steadfast Network

▪ $5.3 billion GWP, +6%

▪ Driven by price and volume increases and new brokers joining the Network

▪ 377 brokers in the Network

▪ 16 new brokers joined in FY18

▪ 5% organic growth in FY18 compared to pcp

▪ Driven by business pack, ISR, professional risks and motor lines with liability subdued

Operational highlightsRecord premium for Steadfast Network and Underwriting Agencies


$1.9bn $2.0bn $2.1bn $2.2bn $2.4bn $2.6bn

$2.0bn $2.1bn$2.3bn $2.3bn

$2.6bn$2.7bn

0

1

2

3

4

5

6


Steadfast Network GWP ($bn)

$3.9bn$4.1bn

$4.4bn $4.5bn

$5.0bn$5.3bn

Steadfast Underwriting Agencies

▪ $914 million GWP, +18%

▪ Driven by price and volume increases and acquisition growth

▪ Insurers moving premium prices towards technical levels

▪ London ‘super’ binder live on Steadfast Client

Trading Platform (SCTP)

▪ Strong start, winning market share

$58m $101m

$378m $386m$449m

$88m

$284m

$367m $391m

$465m

0

200

400

600

800

1,000

Pf FY14 FY15 FY16 FY17 FY18

Steadfast Underwriting Agencies GWP ($m)

$145m

$385m

$745m $777m

$914m

Technology

Steadfast Client Trading Platform (SCTP)

▪ 6 business lines and 14 insurer and underwriting agency partners live on SCTP

▪ Including Steadfast Direct (retail home, motor and landlords cover)

▪ Upcoming activity:

▪ CGU committed to join business pack shortly

▪ Chubb joins business pack in early 2019

▪ Berkley joins liability in Q3 19

▪ Allianz joins business pack, commercial property, commercial motor in FY19

▪ Zurich joins commercial motor in early 2019

▪ 5 year target: $2.3 billion of GWP and ~$23 million EBITA contribution per annum

by FY23 (after amortisation of ~$6m per annum) to Steadfast Group

▪ Based on 80% of Network GWP being available on SCTP and 60% usage by

brokers in Australian Network

▪ Driven by increased revenue from M&A fees and equity brokers

▪ Continued but declining technology spend on SCTP, INSIGHT and

UnderwriterCentral

INSIGHT (client relationship management and back office system for brokers)

▪ 75 brokers live on INSIGHT

▪ Additional 50 brokers currently contracted to migrate onto INSIGHT

Key initiatives progressDelivering on long term strategic initiatives


0

1

2

3


GWP transacted through SCTP ($bn)

Additional contribution to Steadfast Group from SCTP ($m)

0

5

10

15

20

25

30


EBITA contribution to Steadfast Group per annum (after amortisation)

Revenue

Gross spend on technology initiatives

FY18 financial performance

▪ Underlying EBITA growth of $22.3 million (+15.5%)

▪ Organic growth of $13.8 million (+9.6%)

▪ Acquisition growth of $8.5 million (+5.9%)

▪ 99% conversion of NPATA into cash

▪ Unutilised debt facility of $109 million available

▪ Total Group gearing ratio of 17.5%, well within board approved maximum of 30%, made up of 25% for Steadfast Group and 5% for subsidiaries

12 months to 30 June$ million

Underlying FY18

Underlying FY17

Year-on-year growth %

Revenue ($m) 582.5 504.1 15.5%

EBITA ($m) 165.6 143.3 15.5%

NPAT ($m) 75.0 66.4 12.9%

EPS (NPAT) (cents) 9.71 8.87 9.5%

NPATA1 ($m) 97.3 87.2 11.6%

EPS (NPATA) (cents) 12.60 11.65 8.2%

1 Calculated on a consistent basis since IPO.

Group financial performanceStrong underlying earnings growth


50%

42%

8%

Investments in Steadfast equity brokers

Investments in Steadfast Underwriting Agencies

Earnings from other businesses

FY18 underlying EBITA mix (IFRS)

▪ EBITA of $116.1 million driven by organic and acquisition growth

▪ Growth in net fees & commissions due to GWP increases across classes

▪ Acquisition of Whitbread Insurance Brokers in Dec 2017

▪ EBITA margin of 30.5% up from 30.3% in FY17

▪ 0.8% EBITA margin expansion for ‘traditional’ general insurance brokers (excludes AR networks and wholesale, life insurance and trade credit brokers)

12 months to 30 June, $ million

Underlying FY18

Underlying FY17

Year-on-year growth %

Organic growth %

Growth from acquisitions &

hubbing1 %

Net fees & commissions2 334.8 303.3 10.4% 5.6% 4.8%

Net revenue2 380.0 347.1 9.5% 5.0% 4.5%

EBITA 116.1 105.1 10.4% 5.8% 4.6%

EBITA (‘traditional’ brokers only) 89.7 80.2 11.7% 6.0% 5.7%

Equity brokers – consolidated & equity accounted (assuming 100% ownership)

1 Acquisition growth includes the net effect of acquisitions, divestments, and increased equity stakes.2 Net of third party payments.3 EBITA margin = EBITA / Net revenue.

EBITA margin3: FY16 – FY18

Equity brokers financial performanceOrganic and acquisition growth


27.2%

30.3%30.5%29.4%

31.1%

31.9%

26%

27%

28%

29%

30%

31%

32%

33%

FY16 FY17 FY18

All brokers Traditional brokers only

50%42%

8%

Share of FY18 Underlying EBITA

12 months to 30 June, $ million

Underlying FY18

Underlying FY17

Year-on-yeargrowth %

Organic growth %

Growth from acquisitions &

hubbing2 %

Net fees & commissions1 154.3 133.6 15.5% 13.8% 1.7%

Net revenue1 159.1 139.0 14.4% 12.8% 1.6%

EBITA 74.6 62.1 20.2% 18.7% 1.5%

EBITA (excl. profit shares, RBUA) 69.0 55.2 24.8% 20.3% 4.5%

EBITA (excl. profit shares, RBUA, investment in ‘greenfield’ agencies)

68.0 55.1 23.3% 17.7% 5.6%

▪ Net revenue growth driven by price and volume increases

▪ Insurers moving premium prices towards technical levels

▪ Strong performance with 23.3% EBITA growth

▪ 2.4% EBITA margin expansion driven by strong revenue growth in rising price environment and cost containment

▪ 2.6% expansion when investments in ‘greenfield’ agencies such as Emergence and Blend are excluded

Agencies – consolidated & equity accounted (assuming 100% ownership)

1 Net of third party payments.2 Acquisition growth includes the net effect of acquisitions, divestments, and increased equity stakes.3 EBITA margin = (EBITA / Net revenue) after removing profit shares and RBUA closure.

Underwriting Agencies financial performanceStrong earnings growth driven by price and volume increases


EBITA margin3: FY16 – FY18

40.3%

42.5%

44.9%

40.9%

43.7%

46.3%

38%

40%

42%

44%

46%

48%

FY16 FY17 FY18

Agencies excl profit shares and RBUA Agencies excl RBUA & 'greenfield'

50%42%

Share of FY18 Underlying EBITA

▪ Final FY18 dividend of 4.7 cps (fully franked), +7%

▪ Total FY18 dividend of 7.5 cps (fully franked), +7%

▪ Total FY18 dividend payout ratio is 79% of underlying NPAT, in line with target of 65% to 85%

▪ Dividend Reinvestment Plan (DRP) to apply to final FY18 dividend; no discount

▪ DRP shares will be acquired on market

▪ Key dates for final FY18 dividend:

▪ Ex date: 29 August 2018

▪ Dividend record date: 30 August 2018

▪ DRP record date: 31 August 2018

▪ Payment date: 20 September 2018

cen

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1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0


Underlying earnings per share (NPAT) Dividend per share

Final FY18 dividendFinal dividend up 7%


FY19 guidance

▪ FY19 guidance range1:

▪ Underlying EBITA of $185 million - $195 million

▪ Underlying NPAT of $82.5 million - $87.5 million

▪ Guidance subject to:

▪ Insurers continuing to drive moderate premium price increases

▪ Increasing contribution from SCTP (see slide 6 for more detail)

▪ Ongoing technology investment

1 Also refer to the key risks on pages 37 – 39 of the Steadfast Group 2018 Annual Report. 2 FY13 and FY14 are pro-forma; FY15-FY18 are underlying.

FY19 guidanceContinued growth while implementing technology initiatives


$57.4m$62.3m

$90.4m

$129.6m$143.3m

$165.6m

185

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200

FY13 FY14 FY15 FY16 FY17 FY18 FY19F

$28.1m $32.4m$42.1m

$60.4m$66.4m

$75.0m

82.5

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10

20

30

40

50

60

70

80

90

FY13 FY14 FY15 FY16 FY17 FY18 FY19F

$82.5m-$87.5m

Underlying EBITA ($m)2

$185m-$195m

Underlying NPAT ($m)2

Questions

Important notice

This presentation has been prepared by Steadfast Group Limited (“Steadfast”).

This presentation contains information in summary form which is current as at 24 August 2018. This presentation is not a recommendation or advice in relation to Steadfast or any product or service offered by

Steadfast or its subsidiaries and associates. It is not intended to be relied upon as advice to investors or potential investors, and does not contain all information relevant or necessary for an investment decision or that

would be required in a prospectus or product disclosure statement prepared in accordance with the requirements of the Corporations Act 2001 (Cth). It should be read in conjunction with Steadfast’s other continuous

and periodic disclosure announcements filed with the Australian Securities Exchange, ASX Limited, and in particular the Steadfast Group 2018 Annual Report. These disclosures are also available on Steadfast’s website

at investor.steadfast.com.au\.

To the maximum extent permitted by law, Steadfast, its subsidiaries and associates and their respective directors, employees and agents disclaim all liability for any direct or indirect loss which may be suffered by any

recipient through use of or reliance on anything contained in or omitted from this presentation. No recommendation is made as to how investors should make an investment decision. Investors must rely on their own

examination of Steadfast, including the merits and risks involved. Investors should consult with their own professional advisors in connection with any acquisition of securities.

The information in this presentation remains subject to change without notice. Steadfast assumes no obligation to provide any recipient of this presentation with any access to any additional information or to notify

any recipient or any other person of any other matter arising or coming to its notice after the date of this presentation.

To the extent that certain statements contained in this presentation may constitute “forward-looking statements” or statements about “future matters”, the information reflects Steadfast’s intent, belief or

expectations at the date of this presentation. Steadfast may update this information over time. Any forward-looking statements, including projections or guidance on future revenues, earnings and estimates, are

provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Forward-looking statements involve known and unknown risks, uncertainties and other factors that

are outside Steadfast’s control and may cause Steadfast’s actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-

looking statements. Any forward-looking statements, opinions and estimates in this presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about

market and industry trends, which are based on interpretations of current market conditions. Neither Steadfast, nor any other person, gives any representation, assurance or guarantee that the occurrence of the

events expressed or implied in any forward-looking statements in this presentation will actually occur. In addition, please note that past performance is no guarantee or indication of future performance. Possible

factors that could cause results or performance to differ materially from those expressed in forward-looking statements include the key risks on pages 37-39 of Steadfast Group’s 2018 Annual Report.

Certain non-IFRS financial information has been included within this presentation to assist in making appropriate comparisons with prior periods and to assess the operating performance of the business. Steadfast

uses these measures to assess the performance of the business and believes that the information is useful to investors. Non-IFRS information, including underlying P&L items, pro-forma P&L items, underlying earnings

before interest expense, tax and amortisation of acquired intangibles (EBITA), underlying NPAT, underlying net profit after tax but before (pre tax) amortisation (NPATA1), underlying EPS (NPAT) (NPAT per share) and

underlying EPS (NPATA) (NPATA per share), have not been subject to review by the auditors. FY13 and FY14 results are pro-forma and assume the Pre-IPO Acquisitions and the IPO Acquisitions were included for the

full reporting period (all of the IPO Acquisitions completed on 7 August 2013). Prior period underlying EPS (NPAT) and underlying EPS (NPATA) have been adjusted to reflect the re-basing of EPS post the

February/March 2015 1:3 rights issue. All references to Aggregate refer to the 100% aggregation of all investees’ results regardless of Steadfast’s ownership interest.

This presentation does not constitute an offer to issue or sell securities or other financial products in any jurisdiction. The distribution of this presentation outside Australia may be restricted by law. Any recipient of

this presentation outside Australia must seek advice on and observe any such restrictions. This presentation may not be reproduced or published, in whole or in part, for any purpose without the prior written

permission of Steadfast.

Local currencies have been used where possible. Prevailing current exchange rates have been used to convert local currency amounts into Australian dollars, where appropriate. All references starting with “FY” refer

to the financial year ended 30 June. All references starting with “1H” refers to the financial half year ended 31 December. “2H” refers to the financial half year ended 30 June.

1 Calculated on consistent basis since IPO


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